Gov. Dayton to fulfill education spending veto promise, will call for special session

The education spending fight between Gov. Mark Dayton and House Republicans spilled past the end of the legislative session Tuesday, promising to escalate into weeks of partisan combat over how best to use the state's projected $2 billion budget surplus

Dayton said Tuesday he would veto $17 billion in education spending as soon as the bill containing it lands on his desk, and will call a special legislative session once he and House Republicans can settle a standoff over how much money to spend on schools. Dayton wanted a bigger education spending increase than what lawmakers approved Monday, with a special emphasis on early learners, and he framed the dispute as a choice between spending the surplus on children vs. leaving about $1 billion of it unspent with an eye toward major tax cuts next year.

"It is incomprehensible that estate tax cuts for millionaires and property tax relief for large corporations are higher priorities for your House Republican caucus than investing adequately in our students and young children," Dayton said.

House Republicans on the last day of session pushed through an education bill that gave more money to per-pupil aid payments than Dayton had proposed originally, but only a fraction of it for early learning and none for public prekindergarten. The bill received no support from House DFLers. The DFL-led Senate did approve the bill, although Senate Majority Leader Tom Bakk, DFL-Cook, said he agreed with Dayton's goals but saw no way of getting Republicans to do so.

In a prepared statement issued Tuesday afternoon, House Speaker Kurt Daudt, R-Crown, noted the bipartisan nature of the final bill.

"Over the last five months, we have worked together with Senate Democrats to pass a bipartisan budget investing $400 million in new money into Minnesota classrooms," Daudt said.

As lawmakers rushed to finish Monday, Lt. Gov. Tina Smith and other top Dayton advisers met and spoke repeatedly with Daudt in hopes of hatching a last-minute deal to head off the now-inevitable special session. By the time talks broke down around 11:30 p.m., only $25 million separated the final offers from the respective camps — compared to the roughly $42 billion, two-year state budget that lawmakers approved in the session's closing days.

Dayton said he had been ready to surrender his top priority — a guaranteed prekindergarten offering at all Minnesota public schools — in favor of a more flexible approach to reaching early learners. "The governor seems dug in that he wants everything he wants," said Rep. Jenifer Loon, R-Eden Prairie, chairwoman of the House Education Finance Committee. She added: "I just think there was a way out of this … it's unfortunate it didn't happen."

House Republicans had insisted that new money for schools go directly to boosting per-pupil aid to school districts.

Dayton said he would agree to that so long as some money was specifically reserved for early learners. He had not yet actually received the education bill by Tuesday afternoon, but he sent a peremptory veto letter to Daudt, spelling out a number of other objections. Dayton said his last-minute willingness to agree to a smaller education spending increase, and to give up universal prekindergarten, were now off the table.

The timing of a special session is up in the air. Dayton said he would prefer to have an agreement with House Republicans on a path out of the education funding dilemma before he summons all 201 lawmakers back to St. Paul. Both Dayton and Daudt planned a media blitz in the coming days: Dayton to build support for prekindergarten, and Daudt to tout House GOP accomplishments.

Interest groups from both sides of the political divide were also gearing up their messaging in anticipation of a fight that's likely to linger right up to the 2016 election, when all 201 legislative seats are on the ballot.

The education bill that's drawing Dayton's veto also won widespread support from Senate Democrats, but only House Republicans drew Dayton's public ire. He said he accepted assurances from Senate Majority Leader Tom Bakk, DFL-Cook, that he and other Senate Democrats were ready to back Dayton's prekindergarten priority but voted for the smaller education bill because it was the only way to finish the session by Monday night's deadline.

The longer the dispute over education funding simmers, the more pressure will grow on all involved to settle it. The state's current fiscal year ends June 30, meaning that without new funding, the state Department of Education would be forced to close its doors on July 1.

Officials have outlined grim scenarios for public schools should that happen, including the halting of the distribution of state money for special education and English language learner programs. School districts would also be likely to lay off some teachers.

Bill Kautt, a senior official at the Minnesota School Boards Association, said districts would begin preparing contingency plans soon if an education funding deal is not reached quickly.

The setting for a special session has not yet been determined. The Capitol itself will not be available because of an ongoing, large-scale renovation project. The Minnesota Constitution requires only that the Legislature meet somewhere in the city limits of St. Paul, and Dayton said the Department of Administration had begun exploring possibilities.

The special session might not be limited to education funding. Dayton did not preclude the possibility that he would veto others of the half-dozen budget bills that comprise the other roughly $25 billion in state spending for 2016-17. Most of those bills were finalized in the session's closing days, and certain provisions had begun to draw the ire of various DFL-aligned interest groups.

Given what else he might find tucked into those bills, Dayton said, "I would be surprised if I didn't find other reasons to call them back." He said he objected to a provision in the bill funding various state agencies that would allow counties to hire private auditing firms to inspect their finances, a role currently reserved for the elected state auditor, Dayton's fellow DFLer Rebecca Otto.

Dayton said he might not veto the state agency bill over that measure, but would insist as part of special session negotiations that House Republicans be willing to undo it.

Patrick Condon • 651-925-5049

Ricardo Lopez • 651-925-5044